NEW BRUNSWICK, NJ—Multifamily is king, followed by neighborhood retail, but those looking to invest in New Jersey commercial real estate can find opportunities – and challenges – in all sectors, said speakers at the 10^th annual RealShare New Jersey conference, held at the Hyatt Regency here on September 13.

Though the market has taken a pause in the last 30 days investors have been interested in a number of sectors in the state.“We’re spending a lot of time these days on multifamily and retail deals. We’re also doing some industrial,” says Jose Cruz, senior managing director of Florham Park, NJ-based HFF. “The liquidity for multifamily and retail is back to 2007 levels.”Apartments have been the preferred investment vehicle, noted Michael Fasano, a regional manager of Marcus & Millichap, of Elmwood Park, NJ. “There’s a lot of capital sitting on the sidelines, looking to buy, and that’s driving cap rates down,” said Rob Holland, Senior VP and co-managing director of The Kislak Company, Woodbridge, NJ.

Grocery-anchored retail projects also are in high demand, with pricing being driven to historic levels, and cap rates at 6% or better, Cruz added. “There also is interest in “well-leased, well-located industrial. There is interest in a lot of deals, but it is selective,” Cruz said.

The market was picking up so much that investors were broadening their outlook, Fasano said. “Everyone is talking about quality assets, but there are so few that when they do come on the market, the bidding war starts,” Fasano said. “Until the pause 30 days ago, investors were moving on to secondary and tertiary markets.”

Office space continues to be challenged as even the best spaces fight for tenants, but it isn’t completely dead. Kevin Welsh, senior VP of investment properties for CB Richard Ellis noted that CBRE is working on three of the largest office deals in the state.

“You have to look at office investment as totally bifurcated. There’s Newport in Jersey City, where people are buying the credit and cash flow, and then at the other end, a 56 Livingston in Roseland, with 440,000 square feet that’s vacant. We’ve had over 25 offers for this profile of deal,” Welsh said.

But liquidity issues still exist. The CMBS market that was so integral to the financing of deals pre-recession had just begun to make a comeback this year, but paused again in the last month due to concerns about European banks and sovereign debt. That could affect large deals, Welsh noted. CBRE is selling One Newark Center, which is 100% leased, but the lenders attracted to Newark were the CMBS lenders. “Risk is starting to be re-priced,” Welsh said. “I’m not quite as sanguine.”

The future likely will see a great many recapitalizations as loans come due on properties financed prior to the crash. Unlike many other recovery periods this time lenders gave extensions on loans, noted Nick Racioppi, a partner at Riker Danzig, Morristown, NJ, overleveraging is still a concern.

New Jersey is in a better position than other parts of the country, with multifamily fundamentals remaining strong. Core real estate is trading at 6 cap rates, compared with 5s in California, said Paul J. Charlton, senior VP of direct investments for KTR Capital Partners. Jersey City office space also will continue to attract record prices. And new capital continues to come to the state.

“Fannie and Freddie are out there doing 75% to 80% loans,” Holland said. “And we also are seeing local banks stepping up to provide financing for a lot of our clients.”